Durable goods orders fell 1.8% m/m in May, coming in below consensus expectations (-1.0%) as a sequential decline in nondefense aircraft orders dragged the headline orders series lower. Nondefense aircraft orders declined sharply in May as expected, down 35.3% m/m, which subtracted 2.3pp from total durable goods orders growth. Excluding transportation, orders rose 0.5% m/m, in line with consensus expectations (0.5%).
Core capital goods orders rose 0.4% m/m in May, a touch below consensus expectations (0.5%). The details of this morning's report show a second consecutive monthly increase in orders for many core equipment categories. We see a stabilization of demand in these core equipment sectors as indicating that the peak drag on domestic manufacturing output from the stronger dollar may be waning in Q2, notes Barclays
"Elsewhere, manufacturers' inventories of durable goods were weaker than expected in May (-0.2% m/m) and revised down modestly in April. The downward revision to core capital goods shipments in April resulted in a lower starting point for equipment investment in Q2, trimmed our tracking estimate for the series. The decline in durable goods inventories in May along with the modest downward revision to April cut our estimate of private inventory investment for Q2. Taken together, our Q2 GDP tracking estimate fell three-tenths to 3.1%." says Barclays
